SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

    [X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
                                   Act of 1934

                        For Quarter Ended: March 31, 2004

                                       OR

     [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

                         Commission File No. 000-3084133

                                 BLUETORCH, INC.
                                 ---------------

             (Exact name of registrant as specified in its charter)


         Nevada                                             90-0093439
----------------------------                        ------------------------
 (State  of  Incorporation)                            (I.R.S.  Employer  I.D.)

                         12607 Hidden Creek Way, Suite S
                               Cerritos, CA 90703
                            Telephone (562) 623-4040
          (Address and telephone number of principal executive offices
                        and principal place of business)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12 months (or for such a period that the registrant was required
to  file such reports), and (2) has been subject to such filing requirements for
the  past  90  days.  Yes  [X]  No  [  ]

As  of  May  6, 2004, the registrant had a total of 237,505,252 shares of common
stock  issued  and  outstanding.


<TABLE>
<CAPTION>

                                             BLUETORCH, INC,

                                              BALANCE SHEET


<S>                                                                <C>               <C>
                                                                   MARCH 31, 2004    DECEMBER 31, 2003
                                                                   ----------------  -------------------

ASSETS

  Investment in Portfolio Companies . . . . . . . . . . . . . . .  $       853,959   $          559,405

  Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          128,748                  517

   Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . .            5,557                    -
                                                                   ----------------  -------------------

                                                                   $       988,264   $          559,922
                                                                   ================  ===================


        LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable. . . . . . . . . . . . . . . . . . . . . . . .  $        47,961   $          106,156
  Deposits Payable. . . . . . . . . . . . . . . . . . . . . . . .                -                    -
  Loans payable, related parties. . . . . . . . . . . . . . . . .           14,000               26,000
                                                                   ----------------  -------------------

          Total current liabilities . . . . . . . . . . . . . . .           61,961              132,156
                                                                   ----------------  -------------------

STOCKHOLDERS' EQUITY:
  Preferred Series B, $.001 par value; 190,000 shares issued
    and outstanding . . . . . . . . . . . . . . . . . . . . . . .              190                  480
  Preferred Series C, $.001 par value; 10,000,000 shares issued
    and outstanding . . . . . . . . . . . . . . . . . . . . . . .           10,000               10,000
  Common Stock, $.001 par value;950,000,0000 shares
    authorized; 226,705,252 and 190,372,632 shares outstanding at
    March 31, 2004 and December 31, 2003 respectively . . . . . .           90,610               54,277
  Common stock subscriptions receivable . . . . . . . . . . . . .         (112,500)            (112,500)
  Additional Paid in Capital. . . . . . . . . . . . . . . . . . .        6,702,262            5,844,055
  Deficit accumulated during the development stage. . . . . . . .       (5,764,259)          (5,368,546)
                                                                   ----------------  -------------------

          Total stockholders' equity. . . . . . . . . . . . . . .          926,303              427,766
                                                                   ----------------  -------------------

                                                                   $       988,264   $          559,922
                                                                   ================  ===================

</TABLE>

<TABLE>
<CAPTION>

                                 BLUETORCH, INC,

                             STATEMENT OF OPERATIONS


<S>                                 <C>               <C>


                                    FOR THE           FOR THE
                                    THREE MONTHS      THREE MONTHS
                                    ENDED             ENDED
                                    MARCH 31, 2004    MARCH 31, 2003
                                    ----------------  ----------------


INCOME . . . . . . . . . . . . . .  $             -   $             -
                                    ----------------  ----------------

EXPENSES -
  general and administrative . . .         (395,713)         (419,151)
                                    ----------------  ----------------

          Total expenses . . . . .         (395,713)         (419,151)
                                    ----------------  ----------------

NET LOSS . . . . . . . . . . . . .  $      (395,713)  $      (419,151)
                                    ================  ================


BASIC AND DILUTED - loss per share            (0.00)            (0.01)
                                    ================  ================

WEIGHTED AVERAGE COMMON SHARES -
  basic and diluted. . . . . . . .      215,886,652        33,884,253
                                    ================  ================
</TABLE>

<TABLE>
<CAPTION>

                                         BLUETORCH, INC,

                                     SCHEDULE OF INVESTMENTS


<S>                              <C>             <C>         <C>       <C>       <C>  <C>

                                 DESCRIPTION     PERCENT               FAIR
COMPANY                          OF BUSINESS     OWNERSHIP   COST      VALUE          AFFILIATION

Unboxed Distribution, Inc.. . .  Extreme Sports        100%  $727,698  $727,698  (1)  Yes
                                 Apparel

Total Sports Distribution, Inc.  Extreme Sports        100%  $126,261  $126,261  (1)  Yes
                                 Apparel

<FN>


(1)      Fair  value  determined  by  the  Company's  Board  of  Directors  based  on  the  actual
     cost  of  investment.

     See  also  Note  2  for  further  explanation  on  the  Company's  methods  of
       determining  fair  values.
</TABLE>


<TABLE>
<CAPTION>

                                                         BLUETORCH, INC,

                                                STATEMENT OF STOCKHOLDERS' EQUITY

                                                FOR THE PERIOD FROM INCEPTION ON
                                             AUGUST 26, 2002 THROUGH MARCH 31, 2004






                                             Series A              Series B              Series C           Common Stock
                                          Preferred Stock        Preferred Stock      Preferred Stock
                                         Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount
                                         ------     ------     ------     ------     ------     ------     ------     ------


<S>                                      <C>        <C>           <C>        <C>     <C>         <C>      <C>           <C>
At inception on August 26, 2002, as
  restated for effect of reverse
  merger with Aussie Apparel
  (see Note  1 ). . . . . . . . . . . .         -   $         -          -   $   -            -  $     -   97,500,000   $ 1,000

Shares issued in connection with
  merger with Aussie Apparel,
  October 29, 2002 (see Note 1 ). . . .         -             -    610,000     610                         39,590,430     2,639

Shares issued for acquisition
  of tradenames . . . . . . . . . . . .   400,000     1,058,824                                            31,500,000     2,100

Net loss December, 31 2002. . . . . . .         -             -          -       -                                  -         -
                                         ---------  ------------  ---------  ------                       ------------  --------

Balance at December 31, 2002. . . . . .   400,000     1,058,824    610,000     610            -        -  168,590,430     5,739

Shares issued for compensation,
  compensation, services and
  deferred offering costs                                                            10,000,000   10,000    6,191,873     4,963
Shares issued to a foreign
   entity for resale,
  and recorded on balance sheet
    as stock subscription receivable                                                                          750,000        50
Shares issued in connection
   with conversion
    of convertible debentures                                                                                 525,000        35
Creation of stock option / deferred
  Compensation plan

Shares issued in connection
  with rescission
   of employee stock options                                                                                  682,147       682
Shares issued  in connection
   with stock subscription                                                                                 18,545,818    18,321
Rescission of stock option/deferred
   compensation plan
Issuance of convertible debenture,
    with beneficial conversion feature

Shares issued in connection
  with conversion
     of series B preferred stock                                  (130,000)   (130)                         5,087,364     5,087
Shares issued  in settlement of
    notes payable                                                                                          18,200,000    18,200

  Warrants issued in connection
   with license/
    option purchase agreement
Shares cancelled in
  connection with rescission of
   trademark acquisition. . . . . . . .  (400,000)   (1,058,824)                                          (31,500,000)   (2,100)

Shares issued as
   settlement expense
   in relation to rescission
   trademark acquisition                                                                                    3,300,000     3,300

Net loss December 31, 2003

Balance at December 31, 2003. . . . . .         -   $         -    480,000   $ 480   10,000,000  $10,000  190,372,632   $54,277

Shares issued  in connection
   with stock subscription                                                                                 22,500,000    22,500

Shares issued in connection
   with conversion
     of series B preferred stock                                  (260,000)   (260)                        12,165,953    12,166

Shares issued in connection
   with interest and
   penalties on conversion
     of series B preferred stock                                                                            1,666,667     1,667

Series B preferred stock redeemed                                  (30,000)    (30)

Net loss March 31, 2004

Balance at March 31, 2004 . . . . . . .         -             -    190,000   $  190  10,000,000  $10,000  226,705,252   $90,610
</TABLE>


<TABLE>
<CAPTION>

                                BLUETORCH, INC,
                        STATEMENT OF STOCKHOLDERS' EQUITY
                        FOR THE PERIOD FROM INCEPTION ON
                     AUGUST 26, 2002 THROUGH MARCH 31, 2004
                                    (CONTINUED)




                                                                                                   Deficit
                                                                                                   accum-
                                Less stock                   Stock                       Add-       ulated       Total
                                   sub-       Less defer-   options      Treasury      itional    during the    stock-
                                 scription   red offering /deferred      stock         paid-in    development   holders'
                                 receivable     cost      comp'sation    receivable     capital     stage       equity
                                 ----------     ----      -----------     ----------     -------     -----      ------


<S>                                <C>         <C>        <C>           <C>             <C>         <C>         <C>
At inception on August 26,
  2002, as
  restated for effect of reverse
  merger with Aussie Apparel
  (see Note  1 ). . . . . . . . .  $       -   $ -        $         -   $ -             $      -   $     -      $   1,000

Shares issued in connection with
  merger with Aussie Apparel,
  October 29, 2002 (see Note 1 )                                                             2,711       -          5,960

Shares issued for acquisition
  of tradenames                                                                          4,722,900              5,783,824

Net loss December, 31 2002                                                                      -  (136,061)     (136,061)
                                     --------    --------   ----------     --------        -------  --------     ---------

Balance at December 31, 2002. . .          -     -                 -       -             4,725,611 (136,061)    5,654,723

Shares issued for
  compensation services, and
    deferred offering costs                                                               1,164,900              1,179,863
Shares issued to a foreign                                                                                             -
  entity for resale, and
   recorded on balance sheet
  as stock subscription
   receivable . . . . . . . . . .   (112,500)                                              112,450                     -
Shares issued in connection                                                                                            -
  with conversion
   of convertible debentures                                                                78,715                78,750
Creation of stock option/
  deferred
  compensation plan                                        (2,784,600)                   2,784,600                    -
                                                                                                                      -
Shares issued in connection                                                                                           -
  with rescission of
   employee stock options                                                                   47,068                47,750
Shares issued  in connection                                                                                           -
   with stock subscription                                                                 641,492               659,813
Rescission of stock                                                                                                    -
  option/deferred
   compensation plan                                         2,784,600                    (380,250)            2,404,350
Issuance of convertible                                                                                                -
  debenture with
   beneficial conversion feature                                                             8,000                 8,000

Shares issued in connection
  with conversion of
     series B preferred stock                                                              (4,957)                    -
Shares issued  in settlement
    of notes payable                                                                       479,300               497,500

 Warrants issued in connection
  with license/
    option purchase agreement                                                              418,326               418,326
Shares cancelled in
  connection with rescission of
   trademark acquisition                                                    -           (4,722,900)           (5,783,824)

Shares issued as settlement
  expense in relation to
   rescission of trademark                                                  -              491,700               495,000
   acquisition

Net loss December 31, 2003                                                                         (5,232,485) (5,232,485)
                                     --------    --------   ----------     --------     ----------   --------    ---------

Balance at December 31, 2003. . .  $(112,500)  $ -         $         -   $ -          $ 5,844,055  $(5,368,546) $ 427,766

Shares issued  in connection
   with stock subscription                                                                841,750                 864,250

Shares issued in connection
  with conversion
     of series B preferred stock                                                          (11,906)                     -

Shares issued in
  connection with
  interest and penalties
  on conversion of
      series B preferred stock                                                             58,333                 60,000

Series B preferred
  stock redeemed                                                                          (29,970)               (30,000)

Net loss March 31, 2004                                                                              (395,713)  (395,713)
                                     --------    --------   ----------     --------        -------   --------   ---------

Balance at March 31, 2004 . . . .  $(112,500)         -     $         -    $ -          $ 6,702,262 (5,764,259)  926,303
</TABLE>








<TABLE>
<CAPTION>

                                    BLUETORCH, INC,

                                STATEMENT OF CASH FLOWS

                            FOR THREE MONTHS ENDED MARCH 31


<S>                                                             <C>         <C>
                                                                     2004        2003
                                                                ----------  ----------

CASH FLOWS PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
  Net loss . . . . . . . . . . . . . . . . . . . . . . . . . .  $(395,713)  $(419,151)

  ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
    PROVIDED BY (USED FOR) OPERATING ACTIVITIES -
     Costs associated with issuing preferred and
     Common stock at a discount . . . . . . . . . . . . . . .     124,250           -
     Legal expense associated with Series B conversion . . . .      2,950           -
     Shares issued for settlement of interest on Series B. . .     50,000           -
     Stock Issued for employee compensation/services . . . . .          -     124,750
     Stock Issued for debt conversion costs. . . . . . . . . .          -      78,750

  CHANGES IN OPERATING ASSETS AND LIABILITIES:
    (INCREASE) DECREASE IN ASSETS -
      Deposits . . . . . . . . . . . . . . . . . . . . . . . .     (5,557)          -

    INCREASE (DECREASE) IN LIABILITIES:
      Accounts payable . . . . . . . . . . . . . . . . . . . .    (58,195)    177,179
      Loans Payable. . . . . . . . . . . . . . . . . . . . . .    (12,000)          -
      Deposits payable . . . . . . . . . . . . . . . . . . . .          -     (10,000)
      Preferred Series B shares to be issued . . . . . . . . .          -      47,896
                                                                ----------  ----------

          Total adjustments. . . . . . . . . . . . . . . . . .    101,448     418,575
                                                                ----------  ----------

          Net cash used for operating activities . . . . . . .   (294,265)       (576)

CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES -
     Payments advanced to investments in portfolio investments   (294,554)          -
                                                                ----------  ----------

          Net cash provided (used) for investing activities. .   (294,554)          -

CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES -
    Proceeds from issuance of common stock . . . . . . . . . .    747,050           -
    Purchase of Series B . . . . . . . . . . . . . . . . . . .    (30,000)          -
                                                                ----------  ----------

          Net cash provided (used) for investing activities. .    717,050           -

NET INCREASE IN CASH . . . . . . . . . . . . . . . . . . . . .    128,231        (576)
CASH AND CASH EQUIVALENTS, beginning of period . . . . . . . .        517         912
                                                                ----------  ----------

CASH AND CASH EQUIVALENTS, end of period . . . . . . . . . . .  $ 128,748   $     336
                                                                ==========  ==========

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND
  INVESTING ACTIVITIES -

Shares issued for settlement of interest on Series B             $50,000
                                                                =========

Conversion of 260,000 shares of Preferred Series B into
12,165,953 of Common Stock








</TABLE>


                        NOTES TO THE FINANCIAL STATEMENTS


(1)     Description  of  Business

                           ORGANIZATION AND BUSINESS:

Mercury Software, a Nevada corporation, was incorporated on January 29, 1997 and
its  name was changed to Medex Corp. on June 24, 2002. Aussie Apparel Group Ltd.
("Aussie  Apparel"  or "the Company"), a Nevada corporation, was incorporated on
August  26,  2002. In October 2002, Medex Corp. issued an aggregate of 6,500,000
(pre-stock  split) shares of its common stock to the shareholders of the Company
in  connection  with  the merger of the Company with Medex Corp., whose name was
then  changed  to  "Aussie  Apparel  Group  Ltd"  on October 21, 2002. Since the
shareholders  of  the Company became the controlling shareholders of MedEx after
the  exchange,  the Company was treated as the acquirer for accounting purposes.
Accordingly,  the  financial  statements  as  presented  here are the historical
financial  statements  of the Company and include the transactions of Medex only
from  the  date  of  acquisition,  using  reverse  merger  accounting.

The  Company's  name  was  changed to Bluetorch, Inc. effective November 3, 2003

On  June  19,  2003, the Company became a "Business Development Company" ("BDC")
pursuant  to  applicable  provisions  of  the  Investment  Company  Act of 1940.

Until  June  19,  2003  the Company was a development stage enterprise under the
provisions  of  Statement of Financial Accounting Standards ("SFAS") No. 7. Upon
commencing  their operations as a BDC, the Company no longer qualified under the
guidelines  of  SFAS  No.  7.

Based  on  the Company's integration and management strategies, the Company will
operate  on a non-consolidated basis. Operations of the portfolio companies will
be  reported  at the subsidiary level and only the appreciation or impairment of
these  investments  will  be  included  in  the  Company's financial statements.

                         CONDENSED FINANCIAL STATEMENTS

The  accompanying financial statements have been prepared by the Company without
audit.  In the opinion of management, all adjustments (which include only normal
recurring  adjustments)  necessary  to present fairly the consolidated financial
position  as  of March 31,2004, and the results of operations and cash flows for
all  periods  presented  have  been  made.

Certain  information  and  footnote  disclosures  normally included in financial
statements  prepared in accordance with accounting principles generally accepted
in  the  United Sates of America have been condensed or omitted. It is suggested
that  these  condensed  financial  statements  be  read  in conjunction with the
financial  statements  and  notes thereto included in the Company's December 31,
2003,  audited  financial  statements. The results of operations for the periods
ended  March  31, 2004 and 2003 are note necessarily indicative of the operating
results  for  the  full  years.

                                  GOING CONCERN

The  accompanying  financial  statements  have  been prepared in conformity with
accounting  principles generally accepted in the United States of America, which
contemplate  continuation  of  the  Company  as a going concern. As of March 31,
2004,  the  Company  has  generated no revenues and has incurred losses totaling
$5,764,259  for  the  period  from August 26, 2002 (inception) through March 31,
2004.  As March 31, 2004 the Company has working capital of $72,344 but the loss
since inception raises substantial doubt about the Company's ability to continue
as  a  going  concern. These financial statements do not include any adjustments
relating  to the recoverability and classification of recorded asset amounts, or
amounts  and  classification  of  liabilities that might be necessary should the
Company  be  unable  to  continue  as  a  going  concern.

Management plans to take the following steps that it hopes will be sufficient to
provide  Bluetorch  with  the  ability  to  continue  in  existence:


REVENUE

On  September  8, 2003 the Company's subsidiary, Unboxed, signed an agreement to
license (with an option to purchase in 2006) the Bluetorch trademark for apparel
and  certain  other  product  categories.  Unboxed  began  shipment to retail of
Bluetorch  branded  apparel  in the first quarter of 2004 with a limited product
line  of  domestically produced young men's embroidered and/or screened t-shirts
and  sweatshirts.  In the second quarter of 2004, Unboxed will begin shipment to
retail  of  similar  apparel product in the junior's side. In the second half of
2004,  Unboxed  will  ship  a  dramatically  broader  Bluetorch apparel line (as
compared  to  first  half  of  2004) as the Company will include foreign sourced
product  in  young  men's  and  junior's  including  wovens,  knits  and  denim.

Bluetorch  Inc.  has  been working to acquire additional trade names. On October
21,2003  the  Company's other subsidiary, Total Sports finalized an agreement to
license  (with  an  option  to  purchase)  the  True  Skate Apparel ("TSABrand")
trademark.  Total Sports will begin began shipping TSABrand apparel to retailers
in  April 2004. This product line being shipped in the second quarter of 2004 is
limited  as  Total  Sports inherited this product line upon licensing the brand.
Management  feels  that  the  TSABrand  being  shown  to  retailers for delivery
starting July 2004 is a broader, more fashion correct product line. Total Sports
will  also  look  to  broaden  the  distribution  of  where  TSABrand  has  been
historically  sold.  In  addition  to  the core shops that have carried TSABrand
since  1991, Total Sports is planning to expand the brand's presence into better
department  stores  and  upper-end  sporting  goods  retailers.

Total  Sports  will  also  start generating revenue as a result of its licensing
agreement  for  the  Airwalk  trademark  in apparel. This agreement allows Total
Sports  to  begin  shipping to retailers starting in July of 2004. Management is
projecting  the  Airwalk  label to generate the largest percentage of revenue in
2004  from  its  portfolio  of  brands  despite  being  limited to six months of
shipments  in  2004.

On March 6th, 2004 Unboxed signed a letter of intent with Dome Exchange Pty. for
the  licensing rights of Aztec Rose for the North American territory. Unboxed in
now  working  on  completing  a  definitive  agreement  in order to ship initial
product  for  the  spring  2005  season  rather  than the Holiday 2004 season as
originally  projected.

FINANCING

On  June 19, 2003, Bluetorch Inc. filed an Offering Circular that authorizes the
Company  to  raise  up to $3,000,000 via sale of its common stock. Through March
31,2004  the Company has raised $1,812,185 against this limit, and an additional
$270,000  through  May  6,  2004.  These  sums  include  both  cash proceeds and
conversion of debt. This leaves $917,815 that Bluetorch management will continue
to  pursue  from  the  equity  markets.  Part of this will be pursued through an
agreement  that  Bluetorch  entered  into  in  October  2003  with an Investment
Agreement pursuant to which the investment advisor agreed to purchase $1,800,000
of  the  Company's  common  stock  over  a  one year period ending October 2004.

Management  will  also  endeavor  to utilize debt financing (receivables and /or
inventory  financing)  to  create  additional  working  capital.

CONCLUSION

Management  is  projecting  the  majority of 2004's revenue to be created in the
second  half  of  2004 due to the quadrupling of the collective product lines as
compared  to  the collective first half product line. Management is anticipating
that  the  cash  generated  from the projected revenue combined with cash raised
from  a  combination  of  equity and debt financing will allow Bluetorch and its
subsidiaries  Unboxed  and Total Sports to continue to grow their operations and
revenues.


(2)  Investments:

On  August  21,  2003,  the Company formed Unboxed for the purpose of owning and
operating  the  Bluetorch  license  agreement.

In  October  2003, the Company formed Total Sports for the purpose of owning and
operating  the  True  Skate  Apparel  brand  ("TSABrand),".

Unboxed  and  Total  Sports  are wholly-owned subsidiaries ("Investments")of the
Company  and  are  focused  on  providing  apparel  to  the  action sports area,
including  surfing,  wakeboarding,  and  skateboarding.  The Investments plan to
develop high tech garments for athletes and participants in these sports as well
as designing more casual lifestyle clothing aimed at a wider range of consumers.
The  portfolio companies plan to begin manufacturing and marketing under various
brand  names and will market apparel to high end sporting goods stores, mid-tier
department  stores,  as  well  as  specialty chains. The  TSABrand name, will be
marketed to specialty shops and to high end sporting goods and specialty chains.

As  required  by the SEC's Accounting Series Release ("ASR") 118, the investment
committee  of the Company is required to assign a fair value to all investments.
To  comply  with  Section  2(a)(41)  of the Investment Company Act and Rule 2a-4
under the Investment Company Act, it is incumbent upon the board of directors to
satisfy  themselves  that  all  appropriate  factors  relevant  to  the value of
securities  for  which  market  quotations  are  not readily available have been
considered  and  to  determine  the method of arriving at the fair value of each
such security. To the extent considered necessary, the board may appoint persons
to  assist  them  in  the  determination  of  such value, and to make the actual
calculations  pursuant to the board's direction. The board must also, consistent
with  this responsibility, continuously review the appropriateness of the method
used in valuing each issue of security in the company's portfolio. The directors
must  recognize  their  responsibilities  in  this matter and whenever technical
assistance  is requested from individuals who are not directors, the findings of
such individuals must be carefully reviewed by the directors in order to satisfy
themselves  that  the  resulting  valuations  are  fair.

No single standard for determining "fair value .in good faith" can be laid down,
since  fair  value  depends upon the circumstances of each individual case. As a
general  principle,  the  current  "fair  value" of an issue of securities being
valued  by  the board of directors would appear to be the amount which the owner
might  reasonably  expect  to  receive for them upon their current sale. Methods
which are in accord with this principle may, for example, be based on a multiple
of  earnings,  or a discount from market of a similar freely traded security, or
yield  to  maturity  with  respect to debt issues, or a combination of these and
other  methods.  Some of the general factors which the directors should consider
in determining a valuation method for an individual issue of securities include:
1) the fundamental analytical data relating to the investment, 2) the nature and
duration  of restrictions on disposition of the securities, and 3) an evaluation
of the forces which influence the market in which these securities are purchased
and  sold.  Among the more specific factors which are to be considered are: type
of  security,  financial  statements, cost at date of purchase, size of holding,
discount  from market value of unrestricted securities of the same class at time
of  purchase,  special  reports  prepared  by  analysis,  information  as to any
transactions  or  offers  with  respect  to  the  security,  existence of merger
proposals  or tender offers affecting the securities, price and extent of public
trading  in  similar securities of the issuer or comparable companies, and other
relevant  matters.

The  board  has  arrived  at the following valuation method for its investments.
Where  there  is not a readily available source for determining the market value
of  any  investment, either because the investment is not publicly traded, or is
thinly traded, and in absence of a recent appraisal, the value of the investment
shall  be  based  on  the  following  criteria:

1.  Total  amount  of  the Company's actual investment ("AI"). This amount shall
include  all  loans,  purchase price of securities, and fair value of securities
given  at  the  time  of  exchange.
2.  Total  revenues  for  the  preceding  twelve  months  ("R").
3.  Earnings  before  interest,  taxes  and  depreciation  ("EBITD")
4.  Estimate  of  likely  sale  price  of  investment  ("ESP")
5.  Net  assets  of  investment  ("NA")
6.  Likelihood  of  investment  generating  positive  returns  (going  concern).

The  estimated  value  of  each  investment  shall  be  determined  as  follows:

-  Where no or limited revenues or earnings are present, then the value shall be
the  greater  of the investment's a) net assets, b) estimated sales price, or c)
total  amount  of  actual  investment.
-  Where  revenues  and/or  earnings  are  present,  then the value shall be the
greater of one time (1x) revenues or three times (3x) earnings, plus the greater
of  the  net  assets  of  the  investment  or  the  total  amount  of the actual
investment.
-  Under  both  scenarios, the value of the investment shall be adjusted down if
there  is  a  reasonable expectation that the Company will not be able to recoup
the  investment or if there is reasonable doubt about the investments ability to
continue  as  a  going  concern.

The  Company's  Board  of  Directors  has  determined the carrying value of it's
Investment  Portfolio,  in  accordance  with  the Company's valuation policy, at
March  31,2004  to  be  the  actual investment. The investment Unboxed should be
valued  at  $727,698  as  of  March 31,2004 comprised of the following: Warrants
issued  and  cash  paid  to acquire the licensing rights of $418,326 and $45,000
respectively,  inventory  of  $26,635, sales commission draws paid of $1,500 and
advances  from  Bluetorch  of  $236,237.

As  of  March 31,2004, Total Sports has been valued at $126,261 comprised of the
following:  cash  paid  to acquire the licensing rights of $54,000, inventory of
$25,000,  sales  commission  draws paid of $1,500 and advances from Bluetorch of
$45,761.

    (3)   Equity

During  the  three  months  ended  March 31, 2004, the Company issued 17,166,667
shares  of common stock for cash per its Offering Circular. The shares were sold
at  below  market value and accordingly a stock discount expense of $124,250 has
been  recognized  on  the  accompanying  financial  statements.


     (4)  Subsequent  Events

EQUITY  TRANSACTIONS

Subsequent  to  March  31,  2004  and through May 6, 2004 the Company has issued
10,800,000  common  shares  in  exchange  for  $270,000.


     ITEM  2:  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATIONS

This  information  statement  contains  forward-looking  statements.  For  this
purpose,  any  statements contained herein that are not statements of historical
fact  may be deemed to be forward-looking statements. These statements relate to
future  events  or  to  our future financial performance. In some cases, you can
identify  forward-looking  statements  by terminology such as "may," "predicts,"
"should,"  "expects,"  "plans,"  "anticipates,"  "believes,"  "estimates,"
"potential,"  or  "continue"  or  the negative of such terms or other comparable
terminology. These statements are only predictions. Actual events or results may
differ  materially.  There  are  a number of factors that could cause our actual
results  to  differ  materially  from  these  indicated  by such forward-looking
statements.  These  factors  include  but are not limited to economic conditions
generally  and  in  the  industries  in  which  Bluetorch,  Inc may participate;
competition within Bluetorch, Inc.'s chosen industry, including competition from
much  larger  competitors; technological advances and failure by Bluetorch, Inc.
to  successfully  develop  business  relationships.

Although  we  believe  that  the  expectations  reflected in the forward-looking
statements  are  reasonable,  we  cannot  guarantee  future  results,  level  of
activity,  performance,  or  achievements.  Moreover,  we  do  not  assume
responsibility  for  the  accuracy  and  completeness  of  such  forward-looking
statements. We are under no duty to update any of the forward-looking statements
after  the  date  of  this  information  statement to conform such statements to
actual  results.  The  foregoing  management's discussion and analysis should be
read  in  conjunction  with  the  Company's  financial  statements and the notes
herein.

CRITICAL  ACCOUNTING  POLICY  AND  ESTIMATES

Our  Management's  Discussion and Analysis of Financial Condition and Results of
Operations  section  discusses our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets  and liabilities at the date of the financial statements and the reported
amounts  of  revenues  and  expenses during the reporting period. On an on-going
basis,  management  will  evaluate  its estimates and judgments, including those
related  to  revenue  recognition,  accrued  expenses, financial operations, and
contingencies  and  litigation. Management will base its estimates and judgments
on  historical  experience  and on various other factors that are believed to be
reasonable  under  the  circumstances,  the  result  of which form the basis for
making judgments about the carrying value of the assets and liabilities that are
not  readily  apparent  from other sources. Actual results may differ from these
estimates  under  different  assumptions  or  conditions.  The  most significant
accounting  estimates  inherent  in  the preparation of our financial statements
include  estimates  as  to  the appropriate carrying value of certain assets and
liabilities  which  are  not  readily  apparent  from other sources, such as the
deferred  tax  asset  valuation.  These  accounting  policies  are  described at
relevant  sections  in  this  discussion  and  analysis  and in the notes to the
consolidated  financial statements included in our Quarterly Report on Form 10-Q
for  the  quarter  ended  March  31,  2004.

LIQUIDITY  AND  CAPITAL  RESOURCES

We  had  cash  totaling  $128,748  as  of  March 31, 2004. Our other assets were
security  deposits  of  $5,557  for  the  Company's  headquarters  in  Cerritos
California  and  investment  in portfolio companies of $853,959; total assets at
March 31, 2004 were $988,264. At March 31, 2004 our total liabilities of $61,961
represented  $47,961 of accounts payable and $14,000 of loans payable to related
parties.

OUR  PLAN  OF  OPERATION  FOR  THE  NEXT  TWELVE  MONTHS

As  we  discussed in our recent 10K filing, 2003 was a year of restructuring for
Bluetorch  Inc.,  including  the  formation  and  investment  in  our subsidiary
companies.  Paramount  in  this  process  was  the  replacement  of the original
portfolio  of  brands  with  three  new  ones.  As  a result, we created Unboxed
Distribution  Inc., which now wholesales and markets Bluetorch  branded apparel.
Total Sports Distribution Inc. was established to market and wholesale both True
Skate  Apparel  (TSABrand)  and  Airwalk  branded  apparel.

Unboxed  shipped  its first Bluetorch apparel product of young men's t-shirts to
retailers  in  the first quarter of 2004. As previously announced, Unboxed plans
to ship their first junior's t-shirts in the second quarter of 2004. Young men's
and junior's denim, tops and bottoms (knits & wovens) are scheduled for shipment
starting  July  2004.  As a result, the number of Bluetorch styles available for
shipment  to  retailers  will  more  than triple in the third and forth quarters
versus  the first quarter of 2004. Unboxed anticipates that this will generate a
greater  volume  of  buying  per  retail  account.

Unboxed  had  net  sales  of  $43,524 in the first quarter with only young men's
t-shirts  available  for shipment. Unboxed opened and shipped 68 retail accounts
in the first quarter. The management of Unboxed is forecasting that the majority
of  its  net  sales  in  2004  will  occur in the third and forth quarters. This
assumption  is  based on the significantly expanded product line and the ongoing
expansion  of  new  retailers  carrying  Bluetorch  apparel.

The  third and forth quarter revenues for Unboxed will also reflect a higher per
unit  wholesale  price  as the first quarter revenues were reliant on the lowest
wholesale  cost  product  (t-shirts).

Total  Sports  shipped its first product (TSABrand) in April 2004. The licensing
agreement  for  Airwalk apparel allows Total Sports to begin shipping product in
July 2004. We have forecasted Airwalk to provide the majority of the revenue for
2004  out  of  the  three  brands  presently  within  our  subsidiary companies.

Given  that  the collective product lines of our two subsidiaries will more than
quadruple (1st quarter 2004 versus 2nd & 3rd quarters 2004), we are projecting a
dramatic  spike  in  the  collective net sales of our subsidiaries in the second
half of 2004 as compared to the first half. This assumption is also supported by
the  additional  retail  accounts  projected  to be opened by both subsidiaries.

As  previously  announced,  Unboxed  did  sign a letter-of-intent to license the
Aztec  Rose  junior's  label  for  North  America.  Unboxed  in  now  working on
completing  a  definitive  agreement  in  order  to ship initial product for the
spring  2005 season rather than the Holiday 2004 season as originally projected.

Bluetorch will continue to look and possibly make additional investments (in new
brands)  on  behalf  of  its  existing  subsidiaries  and/or  any  new potential
subsidiary  in  2004  and/or  beyond.

As  of  March  31,  2004,  the  Company has not recognized any revenues from its
portfolio investments and for the three months ended March 31, 2004 has incurred
an operating loss of $395,713. The loss represents expenses including payroll of
$63,310,  consulting  fees  for  investment  banking  and  investor relations of
$56,505  and  professional  fees  incurred  for legal and accounting services of
$26,961.  Also  included in the loss are expenses of $124,250 related to issuing
stock  at  a  discount  and  interest  and  penalties  of $50,000 related to the
retirement  of  260,000  shares  of  Preferred  Series  B  stock.

Failure  to  successfully  develop  our  portfolio  companies  would  hinder the
Company's  ability  to  increase  the  size  of our operations and realize asset
appreciation.  If  we  are  not able to generate additional revenues adequate to
cover  increased  operating  costs,  our  business  may  ultimately  fail.

We  have  cash equivalents of $128,748 as of March 31, 2004. Subsequent to March
31,  2004,  the  Company  received  proceeds  of  $230,500  from the sale of its
securities.  In  the  opinion of management, available cash is not sufficient to
fund  current  operations.  However,  management  believes  that  it  can obtain
adequate  capital  via  issuance  and  sale  of  its  securities.


ITEM  3.  QUANTATATIVE  AND  QUALATATIVE  DISCLOSURES  ABOUT  MARKET  RISK.

Our  business  activities  contain  elements of risk.  We consider the principal
types of risk to be portfolio valuations and fluctuations in interest rates.  We
consider  the  management  of  risk  essential  to  conducting  our  business.
Accordingly, our risk management systems and procedures are designed to identify
and analyze our risks, to set appropriate policies and limits and to continually
monitor  these  risks  and  limits  by  means  of  reliable  administrative  and
information  systems  and  other  policies  and  programs.

As  a  business  development company, we invest in illiquid securities including
debt  and  equity  securities  of primarily private companies and non-investment
grade CMBS.  Our investments are generally subject to restrictions on resale and
generally have no established trading market.  We value substantially all of our
investments  at  fair  value  as  policy.  There  is  no  single  standard  for
determining  fair  value  in  good  faith.  As  a result, determining fair value
requires  that  judgments  be applied to the specific facts and circumstances of
each  portfolio  investment  while  employing  a  consistently applied valuation
process  for  the  types  of  investments  we  make.

We  determine  fair  value  to  be  the  amount for which an investment could be
exchanged  in  an  orderly  disposition over a reasonable period of time between
willing  parties  other  than  in  a  forced or liquidation sale.  Our valuation
policy  considers  the fact that no ready market exists for substantially all of
the  securities in which we invest.  Our valuation policy is intended to provide
a  consistent  basis  for  determining the fair value of the portfolio.  We will
record  unrealized  depreciation  on  investments when we believe that an equity
security  is  doubtful,  or  when  the  enterprise value of the company does not
currently  support  the  cost  of our debt or equity investment.  Conversely, we
will  record unrealized appreciation if we believe that the underlying portfolio
company  has  appreciated  in value and, therefore, our equity security has also
appreciated  in  value.  The  values of the investments in public securities are
determined  using  quoted  market  prices discounted for restrictions on resale.
Without  a  readily  ascertainable  market  value  and  because  of the inherent
uncertainty  of  valuation, the fair value of our investments determined in good
faith  by  the  board of directors may differ significantly from the values that
would  have  been  used  had a ready market existed for the investments, and the
differences  could  be  material.

In addition, the illiquidity of our investments may adversely affect our ability
to  dispose  of  debt  and  equity  securities at times when it may be otherwise
advantageous  for  us  to  liquidate  such investments.  In addition, if we were
forced to immediately liquidate some or all of the investments in the portfolio,
the  proceeds  of  such liquidation would be significantly less than the current
value  of  such  investments.

Because  we  may  borrow  money to make investments, our net investment income b
before net realized and unrealized gains or losses, or net investment income, is
dependent  upon the difference between the rate at which we borrow funds and the
rate  at  which  we  invest these funds.  As a result, there can be no assurance
that  a  significant  change  in  market interest rates will not have a material
adverse  effect  on  our  net  investment income.  In periods of rising interest
rates,  our  cost of funds would increase, which would reduce our net investment
income.  We  use a combination of long-term and short-term borrowings and equity
capital  to  finance  our  investing  activities.


ITEM  4.  CONTROLS  AND  PROCEDURES

EVALUATION  OF  DISCLOSURE  CONTROLS  AND  PROCEDURES

As  of  the  end  of  the  period  covered  by  this report, the Company's Chief
Executive  Officer  and the Chief Financial Officer carried out an evaluation of
the  effectiveness  of  the  design  and  operations of the Company's disclosure
controls  and  procedures.  The Company's disclosure controls and procedures are
designed  to  ensure that information required to be disclosed by the Company in
its  periodic  SEC  filings  is recorded, processed and reported within the time
periods  specified in the SEC's rules and forms. Based upon that evaluation, the
Chief  Executive  Officer  and  the  Chief  Financial Officer concluded that the
Company's  disclosure  controls  and procedures are effective in timely alerting
him  to  material information relating to the Company required to be included in
the  Company's  periodic  SEC  filings.

CHANGES  IN  INTERNAL  CONTROLS

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their  evaluation.



                           PART II: OTHER INFORMATION

ITEM  2:  CHANGES  IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY
SECURITIES

     During the quarter ended March 31, 2004, the Company issued an aggregate of
36,332,620  shares  of  its common stock, of which 22,500,000 shares were issued
for  cash pursuant to an Investment Agreement entered into on October 2003.  The
remaining  13,832,620  shares  were  issued  upon  conversion  of  shares of the
Company's  Series  B  Preferred  Stock,  of  which  1,666,667  shares related to
interest  and  penalties.

     In February and March 2004, the Company purchased for cash 30,000 shares of
its  Series  B  Preferred  Stock  at a price of $1.00 per share, from the holder
thereof  in  a  private  transaction.

ITEM  6:  EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)  Exhibits.

None.

(b)  Reports  on  Form  8-K.

None.

                                   SIGNATURES

Pursuant  to  the  requirements  of  the  Securities  Exchange  Act of 1934, the
registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  thereunto  duly  authorized.

                                 BLUETORCH, INC.


May  17,  2004                            By:/s/  Bruce  MacGregor
                                            ---------------------------
                                           Bruce  MacGregor,  President